Startup Professionals Musings

SEPTEMBER 30, 2011

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” Many entrepreneurs stumble at this point, losing the deal or most of their ownership, by having no answer, saying “make me an offer,” or quoting an exorbitant number.

Pre-Money Valuation 246

Pre-Money Valuation Valuation NPV Intellectual Property 246

Both Sides of the Table

SEPTEMBER 29, 2009

But any entrepreneurs raising capital should keep in mind that this opening of the markets could possibly be temporary. They should heed the age old advice that raising slightly more money while you can is always better than trying to optimize future valuations. While the company continues to perform well it has come at a cost.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Startup Professionals Musings

SEPTEMBER 6, 2010

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” Many entrepreneurs stumble at this point, losing the deal or most of their ownership, by having no answer, playing coy, or quoting an exorbitant number.

Valuation 234

Valuation Pre-Money Valuation NPV Startup 234

Gust

NOVEMBER 18, 2012

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” Many entrepreneurs stumble at this point, losing the deal or most of their ownership, by having no answer, saying “make me an offer,” or quoting an exorbitant number.

Valuation 187

Valuation Pre-Money Valuation NPV Intellectual Property 187

Lightspeed Venture Partners

SEPTEMBER 23, 2012

The entrepreneurs had made $150k in revenue running classes for four months at a gym in New York, selling out the classes at $35/class. The right number to focus on is pre money valuation as that is how an investor is valuing the company before the investment. Post money valuation = Pre money valuation + Investment.

Pre-Money Valuation 164

Pre-Money Valuation Post-Money Valuation Valuation Dilution 164

Lightspeed Venture Partners

NOVEMBER 19, 2012

They talked about a referral program, as well as direct sales. They believed that they could get customer acquisition costs to the $10-12 range, but as Cuban points out, that was just hope, they had no evidence to back this up. That would put the cost of the ties at around 2x $85/24 = $7/mth. The others all passed as well.

Pre-Money Valuation 166

Pre-Money Valuation Alabama Valuation Churn Rate 166

Both Sides of the Table

FEBRUARY 17, 2011

A year ago I blogged about one of my most common mantras that applies to sales, biz dev & fund raising alike: “ Time is the Enemy of all Deals.&#. When times are really good for fund raising many teams delay to maximize their valuation. 5 million raised at a $9 million pre-money valuation or 35.7%

Pre-Money Valuation 303

Pre-Money Valuation Dilution Valuation PR 303

Lightspeed Venture Partners

OCTOBER 1, 2012

The company did $1M in sales last year, 90% from wholesale, and had a 10% profit margin. They wanted to get to $10M in sales and then get bought by a big food company. pre money valuation). Cuban has interest in a gluten free diet, and claimed that he liked the company, but his only concern was valuation.

Pre-Money Valuation 158

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 158

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations. Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Startup Professionals Musings

MARCH 18, 2016

As an entrepreneur looking for professional investors, one of the quickest ways to lose credibility and get rejected is to start with a ridiculously high pre-money valuation. Take a hard look around and add valuation for anything you find in this category. First priority is real revenue, customers and contracts.

Intellectual Property 120

Intellectual Property Valuation Pre-Money Valuation Startup 120

Berkonomics

SEPTEMBER 27, 2018

I immediately agreed to come aboard at no cost to clean up the corporation, deferring my investment until that was done. Offering to reincorporate the game company as a new entity to avoid any more surprises, the entrepreneur and I negotiated 10% for my $100 thousand, with the remaining 90% for the founder. Recovery and success.

Pre-Money Valuation 48

Pre-Money Valuation Sales Liquidity Event Valuation 48

Lightspeed Venture Partners

OCTOBER 22, 2012

This implies a pre money valuation of $1.045M. See my breakdown of week 2 for more on how to calculate pre money valuation.). But it only costs $65k to buy a new food truck, so it is easy for others to enter the market. Barbara suggested that this was more money than the company needed.

Pre-Money Valuation 101

Pre-Money Valuation Valuation Dilution Differentiation 101

Hippoland

AUGUST 31, 2018

A few months ago, I was talking with a friend of mine who is a successful serial entrepreneur. There’s a lot of work to do to prepare to raise money at this pre-seed stage. Or even doing pre-sales or lead generation well before having a product. And there’s a huge difference in valuation.

Pre-Money Valuation 90

Pre-Money Valuation Valuation Silicon Valley Early Stage 90

Hippoland

AUGUST 31, 2018

A few months ago, I was talking with a friend of mine who is a successful serial entrepreneur. There’s a lot of work to do to prepare to raise money at this pre-seed stage. Or even doing pre-sales or lead generation well before having a product. And there’s a huge difference in valuation.

Pre-Money Valuation 48

Pre-Money Valuation Valuation Silicon Valley Early Stage 48

Berkonomics

SEPTEMBER 17, 2011

I immediately agreed to come aboard at no cost to clean up the corporation, deferring my investment until that was done. Within three months, we easily obtained $3 million of investment at a pre-money valuation of $30 million. In addition, I loaned the new company $150 thousand for working capital.

Liquidity Event 59

Liquidity Event Pre-Money Valuation Sales Valuation 59

K9 Ventures

MARCH 23, 2011

Obviously, both the founders and the note holders have the common objective of getting the company funded; but assuming the company is fundable, there is a basic misalignment of incentives when it comes to valuation. The typical fix for this problem is to put in a cap in the note for the pre-money price for conversion.

Pre-Money Valuation 132

Pre-Money Valuation Valuation Equity Liquidation Preference 132

Both Sides of the Table

SEPTEMBER 5, 2012

My initial reaction to Adeo when we spoke was that while it may have solved some issues (debt versus equity) it didn’t solve the ones that I’ve been warning entrepreneurs about most loudly. A standard entrepreneur retort I heard back then (2008-09) was “I don’t know what my company is worth now.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Scott Edward Walker

APRIL 9, 2012

A valuation of the startup is thus unnecessary; and, if there is no valuation, there are no problems of dilution, taxes and option pricing. Speed, simplicity and cost. Investors are thus “ penalized ” for helping a startup get a higher valuation as a result of their introductions, domain expertise, etc.

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87